Khans Solicitors v Chifuntwe & Anor

A solicitor’s lien over costs is not protected merely because the paying party knows of the lien. A compromise remains effective unless there is an intention to defeat the solicitor’s lien, ordinarily involving collusion or fraudulent conspiracy. The authorities express one principle, rather than separate doctrines based on notice and collusion. Without the necessary intention, the solicitor cannot reopen the compromise to obtain assessment and payment from the paying party.

The solicitors had acted for the first respondent in judicial review proceedings against the Secretary of State for the Home Department. The proceedings were compromised on terms that the Secretary of State would pay reasonable costs. The first respondent later accepted a £6,000 settlement offer, and the money was paid to him.

In a Part 8 claim, the Costs Judge refused declarations that the costs had not been agreed and that the solicitors’ lien secured payment from the sums recovered. The solicitors appealed, relying principally on Ross v Buxton and seeking to set aside the compromise.

1. Appeal dismissed. The Costs Judge was entitled to determine the issue on the pleaded facts in the Part 8 proceedings. The procedural objection concerning the Secretary of State’s participation had no substance.
2. The solicitor’s lien did not prevent the client from compromising the costs issue merely because the paying party knew of the lien and the solicitor’s intention to assert it. The relevant question was whether the compromise was made with an intention to defeat the solicitor’s interest.
3. The court preferred the submission that Re Margaretson and Jones provided a complete and unitary statement of the law. The authorities did not establish two discrete doctrines. Even if a separate principle could be derived from Ross v Buxton, knowledge of the lien alone would be insufficient; an intention to defeat it would still be required.
4. The finding that the defendants had not colluded to deprive the solicitors of their costs was open to the Costs Judge. The compromise was disclosed, the paying party had not acted secretly, and steps had been taken to establish that the solicitors were no longer on the court record.
5. Re Fuld did not undermine that analysis. Its intervention was precautionary and directed to preventing a possible future collusive compromise. It did not establish a broader notice-only rule.

• High Court (Queen’s Bench Division): appeal from the order of Master Campbell, sitting as a Costs Judge on 17 February 2012, dismissed.